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False Claims in Construction, Update of NCHRP 20-06 Study Topic 16-03
Identification, Prevention & Remedies for False Claims in Highway Improvement Contracting AASHTO SUBMCOMMITTEE ON CONSTRUCTION Burlington, Vermont August 17, Eric M. Kerness, Esq. Kerness Consulting Kerness Consulting
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Is there Fraud in Public Construction?
Kerness Consulting
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False claims in construction?
California experience: Oved & Associates Tutor- Saliba-Perini v. LAMTA New York – Suffern Interchange 96 Million Reconstruction Pile Driving fraud discovered Defective Piles-false reporting Florida – White Construction Allegations of False Statements False Claims Kerness Consulting
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Working equipment ? Kerness Consulting
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False Claims In Construction
Federal : Daewoo Engineering V. USA 73 Fed Cl (Ct Cl 2006), 557 F.3d 1332,(2009) Kerness Consulting
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Why Bother with False Claims?
Public Trust FCA Recoveries Accountability and Transparency “Waste, Fraud & Abuse” Kerness Consulting
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History and Purpose of Civil False Claims Act
Federal: 31 USC 3729 Background Penalties Recoveries State: False Claims Laws Absent State Law: Jurisdiction US Attorney FALSE CLAIMS Kerness Consulting
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Background of Study Topic 16-03
Allison Engine and Totten decisions NCHRP Research Project ARRA Fraud Enforcement Recovery Act “FERA” New Federal Initiatives Kerness Consulting
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False Claim State Statutes
Expanding list of state FCA’s 26 state including:California(1987), Florida, Illinois, Tennessee, Louisiana, Hawaii, Delaware, Nevada, Massachusetts, Virginia … Municipalities: Chicago, NY City, Wash DC State FCAs- allows local authorities to prosecute Kerness Consulting
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False Claim Act: Prohibited Conduct and Liability
The following acts give rise to liability: Knowingly presents or causes to be presented a false or fraudulent claim for payment or approval. Knowingly makes or uses a false record or statement material to a false or fraudulent claim . Conspiring to commit a violation of the other six sections 3729 (a)(1)(A),(B),(C),(E).)(F), or (G). FALSE CLAIMS Kerness Consulting
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False Claim Act: Liability Requirements
Knowingly delivers “less property” to the Government than all of that money or property. Making a delivery to the Government for property “without knowing that the information on the receipt is true” with intent to defraud. FALSE CLAIMS Kerness Consulting
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False Claim Act: Liability Requirements
Knowingly obtaining public property from a Government employee who may not lawfully sell or pledge the property. Knowingly makes or uses a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money to the Government.-Reverse false claims California-Beneficiary of inadvertent FC submission who discovers its falsity and fails to disclose it in reasonable time FALSE CLAIMS Kerness Consulting
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What is “Knowingly” The FCA definition of “Knowingly” means a person who: Has actual knowledge of falsity of information Acts in deliberate ignorance of the truth or falsity of information; or Acts in reckless disregard of the truth or falsity of information FALSE CLAIMS Kerness Consulting
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Remedies Treble Damages Costs / Attorney’s Fees
Civil Penalties of up to $11,000 for each False Claim Other Consequences FALSE CLAIMS Kerness Consulting
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Qui-Tam Actions Qui Tam Relator - “ whistleblower” Recovery
Portion of the proceeds, settlement, plus attorney fees, costs Process FALSE CLAIMS Kerness Consulting
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Statute of Limitations
A civil action may not be brought: More than 6 years after the date of violation Or More than 3 years after the facts known or should be known - but no later than 10 years from date of violation, whichever occurs last FALSE CLAIMS Kerness Consulting
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Examples of potential False Claims:
False certifications: Payment Prevailing Wages-Davis Bacon Buy America Provisions Work Done –Amount due Payment to Subcontractors FALSE CLAIMS Kerness Consulting
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How false claims may arise:
False certification of compliance with contract specifications DBE Record and requirements Falsifying Construction Inspection and Testing Credentials False Invoices or vouchers Claims based on false contractor’s interpretations Kerness Consulting
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How false claims may arise
Subcontractor claims Claims for Equitable Contract Adjustments Falsified schedules - delay analysis Inflated progress billings Lack of proper credits-Double billing Bait and Switch -Substitutions of materials with inferior product FALSE CLAIMS Kerness Consulting
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Overcharging for Changer Orders or for claims
Kerness Consulting
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False Claim Study Research Process
Survey In depth phone interviews Personal Visits Discussion with Knowledgeable experts Kerness Consulting
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Survey information New measures or programs to detect false claims
Use of certification Methods to id False claims Disclosure at pre and post qualification. Use of set off provisions Use of contractor compliance programs Kerness Consulting
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Knowledgeable Experts
Kerness Consulting
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Legal Digest Will Address
Brief history of FCA FERA changes to FCA New federal initiatives & regulations Examples of FCA Persons Who can be sued Damages FCA Statue of Limitation Public Disclosure bar Kerness Consulting
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Legal Digest Will Address
Qui Tam Provisions Other Applicable Federal Statutes State False Claim Statutes Results of Survey Results of In depth Interviews Ideas for Consideration Red Flag lists Kerness Consulting
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Questions Eric Kerness. Esq. Kerness Consulting 518 -347 2778
( mobile) Kerness Consulting
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